Oil majors need stable environment for North African investment

Madrid (Platts)--19Sep2006

International oil companies need a stable fiscal and regulatory
environments if they are to make long-term investments in oil and gas projects
in North Africa, Executive Director Upstream for Repsol YPF, Nemesio Fernandez
Cuesta, said Tuesday.
High oil and gas prices provided both producers and IOCs with the
motivation to invest, but the price environment had become more volatile, cost
inflation was rising and project economics were hard to predict, Cuesta said
during the North African Oil and Gas conference in Madrid.
As a result, trust and cooperation between IOC and NOCs, working within a
predictable regulatory and fiscal environment, was a priority for capital
intensive investment, he added.
Cuesta also highlighted the importance of technology in accessing new and
more complex reserves in North Africa, again an area in which cooperation
between NOCs and IOCs would bring mutual benefits.

DELEGATES' CONCERNS
Delegates raised concerns that the current level of investment in North
African countries was insufficient to accommodate the growth in demand for gas
in Europe over the next ten years.
Philippe Suaquet, a senior vice president for Total, forecast that gas
demand in Europe would rise from 570 billion cubic meters/year in 2005 to 710
Bcm/yr in 2015, with south European economies amongst the most dynamic in
terms of rising demand.
However, North African producers would struggle to increase their share
of the market. Concerns were expressed regarding the lack of growth in Libyan
and Egyptian reserves and about Algeria's ability to raise exports as some of
its older gas fields become depleted.
Suaquet said the real winners from the growth in European gas demand
would be LNG producers in the Middle East and further a field in the Atlantic
basin.
Nigerian LNG, for example, would be able access European markets, which
were likely to remain fragmented, owing to the lack of interconnecting
pipelines planned over the next ten years, limiting the penetration of
pipeline supplies from both Russia and North Africa.

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